September 22, 2021

Friday Footnotes: Firms Sweating Staff Losses; Who Got Fined This Time?; Accountant’s XXX Problem | 8.27.21

Staffing and COVID-19 relief programs are firms’ top concerns in 2021 [Journal of Accountancy] Finding qualified staff is an enduring concern that continues to challenge CPA firms this year, according to the 2021 AICPA Private Companies Practice Section (PCPS) CPA Firm Top Issues Survey. Hiring staff emerged as the No. 1 issue affecting firms that employ 6–10, 11–20, or 21 or more professionals.

PwC remains the largest of the Big Four in Australia [Consultancy.uk] For over a decade already, PwC has been the Big Four leader in Australia, and going into the 2021/22 financial year (the Big Four operate with mid-year financial years), this will be no different. Despite remarkable growth during a pandemic-hit year from the numbers three and four in the market, EY (+9%) and KPMG (+6%), PwC actually saw its lead versus number two widen, with Deloitte taking at 7% revenue hit in the past financial year.

Deloitte adds new cyber exec to government practice [Washington Technology] Deloitte has hired retired Air Force Lt. Gen. Chris Weggeman to the leadership team of the professional services firm’s government and public services practice. Weggeman will oversee what Deloitte calls “mission-critical operations” within the practice’s cyber and strategic risk portfolio, the firm said Thursday.

U.K. Accounting Watchdog Fines EY $3 Million Over Stagecoach Audit [Wall Street Journal] The Financial Reporting Council on Wednesday fined EY £2.2 million, or $3.02 million, for what it called serious deficiencies in the audit. The Big Four firm failed to collect sufficient evidence and challenge the material assumptions underpinning Stagecoach’s financial statements, the FRC said. The agency didn’t allege financial misstatements by the company, it said. The fine was reduced from £3.5 million for mitigating factors, including an admission and cooperation by the firm.

Who Will Watch the Watchmen? Audit Shortcomings [National Review] Specifically, the only regular evaluations of audit performance of firms auditing private entities (except where issuance of securities is involved) are unofficial, voluntary peer reviews by other audit firms. The Journal reports that 91% of the reviewed firms in a U.S. Department of Labor (“DOL”) study received the “highest ‘pass’ grade, while only 4% the “worst ‘fail’ score.” One suspects that this much variance from normal human experience suggests strongly that this peer-reviewing is a “paper-tiger.”

EXCLUSIVE U.S. SEC to scrutinize firms’ digital-engagement practices as investor worries grow [Reuters] The SEC plans to launch a sweeping consultation in coming days that could have major ramifications for retail brokers, wealth managers and robo-advisers, which increasingly use such tools to drive customers to higher-revenue products.

Peleton Cuts Bike Price and Discloses Inventory Accounting Problem [AdAge] An audit of fiscal 2021, which ended June 30, found “a material weakness” in the internal controls that govern Peloton’s financial reporting. The problem stemmed from a discrepancy in the company’s year-end inventory counts. “It did not result in a material misstatement of our financial statements or disclosures, nor will result in any restatements of historical results,” the New York-based company said. “We are committed to fully remediating these issues as soon as possible.”

Accountant faces 20 years in jail after he admitted stealing $13m and laundering it through stepson’s fiancée’s adult website before spending it on property and yachts [Daily Mail] Ralph Puglisi, 59, of Palm Harbor, Florida, was found to have made the non-business charges on two company credit cards while working as an accounting manager for the University Medical Service Association. It is an organization at the University of South Florida that provides staffing and other support for the school’s health care endeavors. He then used the adult website mygirlfund.com to clean about $11.5million of the stolen money, which he then spent to fund a life of luxury, including property in the US Virgin Islands, chartering yachts, and an Audi. The site lets users chat with women in exchange for money.

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